Partially upheld: Investment mis-selling complaint against Fairstone Wealth Management Limited

Decision detail

Summary

Mr A transferred his defined benefit pension (£1.4m) to a SIPP on Fairstone's advice in December 2016, paying an initial fee of approximately £21,000. Despite paying for an ongoing 'active plan' service requiring regular reviews, the majority of his funds remained uninvested in cash for over a year. Although Fairstone made multiple attempts to agree investment choices with Mr A through recommendations and meetings, contact became sporadic and no annual reviews were conducted. Only £250,000 was invested in February 2018, with the remainder staying in cash. Mr A complained in 2019 about poor service despite ongoing fees. The ombudsman partially upheld the complaint, finding Fairstone failed to provide contracted reviews but was not solely responsible for the uninvested funds, as Mr A (a former investment adviser) had responsibility to mitigate losses. Fairstone was directed to refund £8,500 in annual fees but not to compensate for lost investment growth.

The Ombudsman's reasoning

While Fairstone failed to provide the regular reviews Mr A paid for and its service was sporadic, the ombudsman found Fairstone made reasonable efforts to help Mr A make investment choices through multiple recommendations and meeting attempts. Mr A, as a former investment adviser working in the financial sector, had responsibility to mitigate losses by accepting initial recommendations or engaging more proactively. The funds remaining in cash was not solely Fairstone's responsibility given Mr A's knowledge and the contact attempts made. However, Fairstone's failure to conduct annual reviews warranted compensation for fees paid for services not received.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website